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GR 114167, July 12, 1995

FACTS: Pag-asa sales and petitioner Coastwise entered into a contract to transport molasses
from Negros to Manila using the latter’s dumb barges(barge meant to be towed) which was towed by a
tugboat likewise owned by petitioner. Upon reaching Manila Bay, one of the barges struck an unknown
sunken object which caused a damage on the forward buoyancy compartment and as a result, the
molasses at the cargo tanks were contaminated and rendered unfit for the use it was intended. Pag-asa
rejected the shipment and filed a formal complaint with the insurer of its cargo, private respondent Phi.
Gen. and against the petitioner. Petitioner denied the claim and Phil Gen paid Pag-asa Sales for the
damaged cargo in order to subrogate it. Phil Gen filed an action against petitioner before the RTC
seeking to recover the amount it paid to Pag-asa for the latter’s lost cargo claiming that petitioner is
presumed to have violated the contract of carriage. RTC rendered judgement in favore of Phil Gen which
was affiremed by the CA, hence this petition.

ISSUES: WON petitioner transformed into a private carrier.

HELD: No. Although a charter party may transform a common carrier into a private one, the
same however is not true in a contract of affreightment on account of the aforementioned distinctions
between the two.

Petitioner admits that the contract it entered into with the consignee was one of affreightment. 5 We agree.
Pag-asa Sales, Inc. only leased three of petitioner's vessels, in order to carry cargo from one point to
another, but the possession, command and navigation of the vessels remained with petitioner Coastwise

Pursuant therefore to the ruling in the aforecited Puromines case, Coastwise Lighterage, by the contract
of affreightment, was not converted into a private carrier, but remained a common carrier and was still
liable as such.

The law and jurisprudence on common carriers both hold that the mere proof of delivery of goods in good
order to a carrier and the subsequent arrival of the same goods at the place of destination in bad order
makes for a prima facie case against the carrier.

It follows then that the presumption of negligence that attaches to common carriers, once the goods it
transports are lost, destroyed or deteriorated, applies to the petitioner. This presumption, which is
overcome only by proof of the exercise of extraordinary diligence, remained unrebutted in this case.

The records show that the damage to the barge which carried the cargo of molasses was caused by its
hitting an unknown sunken object as it was heading for Pier 18. The object turned out to be a submerged
derelict vessel. Petitioner contends that this navigational hazard was the efficient cause of the accident.
Further it asserts that the fact that the Philippine Coastguard "has not exerted any effort to prepare a
chart to indicate the location of sunken derelicts within Manila North Harbor to avoid navigational
accidents"6 effectively contributed to the happening of this mishap. Thus, being unaware of the hidden
danger that lies in its path, it became impossible for the petitioner to avoid the same. Nothing could have
prevented the event, making it beyond the pale of even the exercise of extraordinary diligence.

However, petitioner's assertion is belied by the evidence on record where it appeared that far from having
rendered service with the greatest skill and utmost foresight, and being free from fault, the carrier was
culpably remiss in the observance of its duties.

The patron of the vessel admitted he was not licensed. Clearly, petitioner Coastwise Lighterage's
embarking on a voyage with an unlicensed patron violates this rule. It cannot safely claim to have exercised
extraordinary diligence, by placing a person whose navigational skills are questionable, at the helm of the vessel
which eventually met the fateful accident. It may also logically, follow that a person without license to navigate,
lacks not just the skill to do so, but also the utmost familiarity with the usual and safe routes taken by seasoned
and legally authorized ones. Had the patron been licensed, he could be presumed to have both the skill and the
knowledge that would have prevented the vessel's hitting the sunken derelict ship that lay on their way to Pier 18.
As a common carrier, petitioner is liable for breach of the contract of carriage, having failed to
overcome the presumption of negligence with the loss and destruction of goods it transported, by proof of its
exercise of extraordinary diligence.


GR 150403, JANUARY 25, 2007

FACTS: Petitioner as carrier and MCCII as charterer entered into a voyage charter to load silica quartz on
board the vessel at Negros Occidental for transport and discharge at Misamis Oriental to consignee Ferrrochrome
Phils. Pursuant to the contract, petitioner received the goods and loaded them on board and left the next day. The
shipment never reached the destination because the vessel sank resulting to the total loss of the cargo. MCCII filed
a claim for the loss of the shipment from the insurer, Phil. Home Assurance corp and it subrogated it. Phil. Home
filed a case with the RTC for the reimbursement of the amount paid to MCCII which rendered judgement in favor
of Phil. Home and the CA affirmed, hence, this petition.

ISSUES: WON the contract entered into was a contract for hire where the vessel not owned by the
petitioner was hired and therefore cannot be held liable for the loss of the shipment.

HELD: No. The voyage charter here being a contract of affreightment, the carrier was
answerable for the loss of the goods received for transportation. Based on the agreement signed by the
parties and the testimony of petitioner’s operations manager, it is clear that it was a contract of carriage petitioner
signed with MCCII. It actively negotiated and solicited MCCII’s account, offered its services to ship the silica quartz
and proposed to utilize the M/T Espiritu Santo in lieu of the M/T Seebees or the M/T Shirley (as previously agreed
upon in the voyage charter) since these vessels had broken down.
There is no dispute that petitioner was a common carrier. At the time of the loss of the cargo, it
was engaged in the business of carrying and transporting goods by water, for compensation, and offered its
services to the public. From the nature of their business and for reasons of public policy, common carriers are
bound to observe extraordinary diligence over the goods they transport according to the circumstances of each
case. In the event of loss of the goods, common carriers are responsible, unless they can prove that this was
brought about by the causes specified in Article 1734 of the Civil Code. In all other cases, common carriers are
presumed to be at fault or to have acted negligently, unless they prove that they observed extraordinary diligence.
Petitioner was the one which contracted with MCCII for the transport of the cargo. It had control
over what vessel it would use. All throughout its dealings with MCCII, it represented itself as a common carrier. The
fact that it did not own the vessel it decided to use to consummate the contract of carriage did not negate its
character and duties as a common carrier. The MCCII (respondent’s subrogor) could not be reasonably expected to
inquire about the ownership of the vessels which petitioner carrier offered to utilize. As a practical matter, it is
very difficult and often impossible for the general public to enforce its rights of action under a contract of carriage
if it should be required to know who the actual owner of the vessel is. In fact, in this case, the voyage charter itself
denominated petitioner as the "owner/operator" of the vessel.


GR 148496, March 19, 2002